We have significant experience in what we term "executive-led transactions". These are investment banking transactions led by a current or former senior operating executive(s) who may or may not be employed by the company involved. Executive-Led Transactions inherently create an exclusive deal, unless one of the parties involved decides to shop the transaction.

Typically our client engages us to seek out an executive with an appropriate profile: usually at least 15 years of experience, and someone seeking to take a CEO role in his/her industry of experience. We then work together with our client and the executive to identify a target, and then execute an investment in that company.

These transactions include but are not limited to add-ons, rollups, commercialization of IP, recapitalization, management buy-outs/buy-ins, and spinouts.

We think that the medium-term environment is highly favorable for executive-led transactions, for 4 reasons:

• Many motivated sellers. A wave of baby boomers who must sell their businesses will result in over $10 trillion enterprise value of businesses changing hands in the next 10 years.
• High pent-up demand to divest by corporations. Many corporations are in need of extra capital and divestitures are an obvious way to achieve this.
• More potential leaders of such transactions. The global economy is now seeing an unusually large pool of senior executives who are in transition or underemployed, many of whom are very interested in becoming owner/operators with PE backing. These executives are difficult to reach through conventional means.
• Easier to execute executive-led transactions. The recent US court decision re: John Q. Hammons Hotels enables non-controlling management to consummate an MBO without searching judicial inquiry.

Many companies are suitable for an executive-led transaction. Some of the industry characteristics that indicate a company is particularly suitable:

• An operating executive can draft a plan to create significant value through operational improvement.
• The company is in an oligopolistic industry with high returns to scale, which makes it a fit for a rollup.
• The industry is undergoing a step change, e.g., a regulatory change which creates new opportunity to build industry leaders.

We think there is a particularly good fit in firms in which the leader's status is critical for the company. Among the attributes of such companies:

• Industries that are driven by the CEO's personal brand, e.g., many fashion companies.
• A founding entrepreneur who wants to return to his leadership role.
• Requirement for industry-specific knowledge, which implies that only a small number of managers are well-qualified to run the firm.
• Leader's status confers special benefits, e.g., the firm has potential to earn significant extra revenue from government programs that favor members of traditionally underrepresented minority groups.